Statewide Business Survey Finds New No-Fault Fee Schedule Will Have Devastating Impact on Services, Jobs, and Patients

Small businesses that care for patients who have suffered severe injuries in auto accidents will be forced to close 

LANSING, Mich.—(April 14, 2021)—A recent survey of 71 health care providers across Michigan paints a grim picture of what will happen to their organizations and small businesses and their patients if a new no-fault insurance fee schedule for post-acute care providers goes into effect as planned on July 1, 2021.

“Our survey unequivocally shows that Michigan is headed toward a severe reduction in services for current and future victims of severe and catastrophic auto accidents—fully 90% will have to reduce services, and 0% believe they will be able to expand services,” said Darren Lubbers, Ph.D., the lead researcher of the study. “Specialized post-acute hospitals and businesses that provide specialized rehabilitation services to auto accident victims work out of the view of most of the public, but the reduction of services and closures of rehab centers will severely impact Michigan families.”

Without an immediate legislative fix, a startling 57% of providers said that it’s likely they would be forced to close their doors to patients who have been involved in severe auto accidents. The average pay cut small health care businesses said they could withstand was 13.7% compared to the 45% cut dictated by the new fee schedule. Survey respondents also said they expected to lay off employees.

The survey was conducted by IBH Analytics, a firm Lubbers founded in 2012 with a focus on driving efficient health care outcomes, and was commissioned by Ann Arbor’s Eisenhower Center, which provides residential services to severely patients with severe brain damage.

House Bill 4486 and Senate Bill 314 were recently introduced in the Michigan Legislature to provide a narrow solution that will not affect any other part of no-fault 2019 insurance reforms whatsoever. It still caps what providers can charge, meaning consumer cost-saving measures are preserved. However, Senate Majority Leader Mike Shirkey has told news outlets that giving these bills a fair hearing is not a priority.

“The data is in, and the results are definitive—large and small businesses across this state, and the patients they serve, are staring down a crisis,” said Devin Hutchings, president of Eisenhower Center and CPAN. “Without a fix, half of brain injury rehabilitation providers across the state are likely to go out of business. That will not only be devastating to patients and their families, but to workers and local economies as well. The clock is ticking—we need the Legislature to act immediately on HB 4486 and SB 314.”

The release of the IBH survey comes on the heels of a survey conducted by ROI Insight, based in Grosse Pointe, on behalf of the Michigan Brain Injury Provider Council (MBIPC), a trade group committed to providing high quality, ethical rehabilitation services with the mission of achieving the best outcomes for patients.

The MBIPC survey found that 86% of post-acute care facilities had little to no confidence they would be able to remain open if the fee schedule is enacted without changes. Up to 5,000 Michigan providers would lose their jobs, many in rural areas where the economy has already been hit hard by the pandemic. Thousands of vulnerable patients with severe, complex injuries would be thrown into chaos as they suddenly lost access to care. Even family caregivers for patients stable enough to remain at home would see their reimbursement rates gutted.

Before the state’s new auto insurance law was passed in 2019, people in catastrophic accidents could focus on their rehabilitation, knowing the specialized care and services they needed to lead a dignified, independent life were covered by the auto insurance policies that they paid for. In the rush to finalize the law, the Legislature implemented a new fee schedule that effectively slashes reimbursement rates for a wide range of specialized rehabilitation services by almost half.      

The fee schedule included in the 2019 legislation, set to take effect July 1, only covers services that have been assigned codes by the U.S. Centers for Medicare and Medicaid Services (CMS). Because most of the services hospitals provide are covered by Medicare, the new fee schedule does not have a direct effect on hospitals; however, specialized rehabilitation services, which do not take place in a hospital setting, often do not that do not have a specific Medicare code.